Supermarket chains had big role in Rosella collapse, says receiver

The receiver of Australian food brand Rosella says supply arrangements with Coles, as well as Woolworths supermarkets, played a big role in the company's collapse two years ago.

The Gourmet Food group, makers of Rosella sauce and Waterwheel biscuits, fell into receivership in 2012 before parts of the business were sold off last year.

The maker of Rosella went into receivership in 2012.Credit:Rob Homer

The collapse came less than a year after the competition watchdog alleges Coles began a campaign to boost its pre-tax earnings by as much as $30 million by demanding payments from 200 suppliers - including Waterwheel.

The campaign is now part of Federal Court proceedings by the Australian Competition and Consumer Commission against the supermarket chain over alleged unconscionable behaviour.

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Jim Sarantinos, a partner at Ferrier Hodgson, said the demands of both supermarket chains through rebates contributed significantly to Gourmet's dire financial state. He said any further rebate would have had a severe impact on the business.

''Coles and Woolworths had a target they wanted to reach in regards to private label products, which are obviously sold at a significant discount to branded products like Rosella,'' he said.

''The problem that Rosella had was that it didn't necessarily have the financial resources to make the changes that were required to counter that move.''

Waterwheel is one of the ''tier 3'' suppliers that Coles targeted for payments, according to the ACCC's statement of claim, lodged with the Federal Court on Monday.

A creditor's report from 2012 lists the heavy toll of the retailer wars as one of the reasons why Gourmet Food failed. It says sales from Rosella's branded products fell 16 per cent in 2012 ''due to retailer focus on private label products''.

It adds that sales to major food chains were ''substantially less that budgeted'' due to major retailers ''deleting various product lines in store and delays in launching of new products and focusing on private label products''.

There was no mention of the payments demanded by Coles as alleged by the ACCC.

Another tier 3 supplier - Unibic, the former manufacturer of Anzac biscuits - also collapsed in 2012.

Mr Sarantinos was not aware of a specific ''supply chain'' rebate but said most manufacturers received a discount from the supermarkets of around 15 per cent of sales, which incorporated advertising and promotional rebates.

He said this affected businesses like Rosella that were unable to easily restructure their cost base.

''The push from the supermarkets towards private labels and the negotiating power they are able to exert on suppliers certainly had an impact on Rosella's performance,'' he said.

''There were still issues in Rosella's business, and it may have been that receivership was inevitable, but [the push by the supermarkets] was certainly a big factor.''

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The ACCC alleges Coles ran an ''orchestrated and organised'' campaign to boost its earnings by demanding payments from tier 3 suppliers as a rebate for the supermarket group improving its supply chain.

A directions hearing is expected on June 6. Wesfarmers declined to comment.